In December 2010, industrial production contracted 0.7%, in the seasonally adjusted series...

In December 2010, the industrial production contracted 0.7%, in the seasonally adjusted series, after remaining virtually stable in the last four months. Compared with the same month of 2009, there was an expansion of 2.7%, below the 5.3% recorded in November. As a result, the year indicator was at 10.5%, below the average growth of the eleven previous months (11.2%). The production of the sector in the last quarter of 2010 surpassed the one relative to the fourth quarter of 2009 in 3.3%, but it remained practically stable (-0.1%) compared with the level observed in the immediately previous quarter (seasonally adjusted series). In 2010, the first semester advanced 16.2% compared with the same period of the previous year, reducing the pace of growth to 5.6% in the following semester.

Growth of 10.5% in 2010 is the highest since 1986

Throughout 2010, the industrial sector recorded a decreasing growth, with an evident reduction in the pace since the second quarter of the year. The analysis of the sector behavior in 2010, considering the quarterly moving average index, reveals two different phases. In the first phase, which encompasses the period from March of 2009 to May of 2010, there was an overall increase in the level of production, with the sector total growing 22.0% and all the categories of use registering gains in this period. The highlights were durable consumer goods (46.5%) and capital goods (29.0%), both favored by government fiscal stimulus, followed by intermediate goods (21.8%) and semi- and non-durable consumer goods (10.2%). In the following phase, there was a reduction of 1.5% in the overall production between June and December of 2010, a movement followed by all the categories of use: intermediate goods (-0.9%), durable consumer goods (-1.3%), capital goods (-1.4%) and semi- and non-durable consumer goods (-1.9%). Still considering the seasonally adjusted series, the signs of reduction in the pace during 2010 were also evident in the quarter indicators, as the 3^rd and 4^th quarter of 2010 recorded negative rates (-0.6% and –0.1%, respectively), reversing the positive indexes recorded in January-March (3.1%) and April-June (1.1%). However, compared with 2009, the industrial sector closed 2010 with an expansion of 10.5%, and an overall growth across the sectors. It is worth mentioning that this result not only did reverse the drop of 7.4% observed in 2009, but also pointed to the highest index since the 10.9% recorded in 1986.

Among the sectors, 15 recorded a high and 11 recorded a drop between November and December

With the rate of -0.7% recorded between November and December, after the reduction of 0.2% in the previous month, the production level was at 2.7%, below the record level registered in March of 2010. This result reveals that more sectors expanded production (15) than otherwise (11) among the twenty seven surveyed sectors. Among the industries that reduced production, the major influence to the overall index came from the contraction of 13.3% in the communication equipment and electronic material sector, followed by primary metallurgy (-4.2%), edition and printing (-2.5%), cellulose and paper (-1.5%), pharmaceutical (-1.5%) and other transportation equipment (-2.1%). Conversely, machines and equipment (1.8%), other chemical products (1.5%), non-metallic minerals (2.0%), medical-hospital instrumentation, optical and other equipment (9.7%) and office machines and computer equipment (3.9%) were the main positive contributors.

Among the categories of use, still comparing with November of 2010, negative results remained for durable consumer goods (-0.6%) and semi- and non-durable consumer goods (-0.4%). While the first one, after growing 2.9% last October, contracted by the second consecutive month and accumulated a loss of 1.0% in this period, the second one, by declining 1.3% between October and December, returned to the expansion rate of September (1.3%). The capital goods sector registered a negative rate again (-0.5%), after advancing 3.2% in the previous month. The production of intermediate goods, by repeating the rate of November (0.0%), was the only category of use that did not record a negative result in December.

The drop in production between November and December contributed to a slight negative change (-0.2%) in the quarterly moving average index of the overall industry in December, reversing two consecutive months of zero growth. Among the categories of use, the semi- and non-durable consumer goods sector (-0.4%) recorded the only negative rate in December. Conversely, the capital goods sector (0.9%) registered the highest advance, followed by durable consumer goods (0.6%), which continued the upward trend started last August, and intermediate goods (0.2%).

Industrial production advances 2.7% in comparison with December of 2009

In relation to December of 2009, the industrial sector recorded an increase of 2.7%, sustained by the growth of 19 among the 27 sectors. The highlights were the expansion of 12.1% for motor vehicles, followed by mining and quarrying industry (10.4%), machines and equipment (6.2%), machines for office and computer equipment (15.1%), non-metallic minerals (7.0%), beverages (5.6%) and other transportation equipment (12.3%). In those sectors, the highlights were automobiles, vehicles for transportation of goods, tractor trucks and trucks; iron ores; air-conditionings, refrigerators for domestic and industrial use, wheel loaders and forklift trucks; computers and automatic teller machines; "portland" cement and ceramic and other material tiles for coating; beer, draft beer and soft drink; and airplanes and motorcycles. Conversely, the main negative contributors were electronic material and communication equipment (-28.0%), pharmaceutical (-8.8%), primary metallurgy (-4.3%) and food (-1.4%), mainly influenced by the contractions in the manufacturing of telephone switching apparatus and televisions in the first sector; medicines in the second one; cold rolled coil and carbon steel ingots, blocks and rods in the third one; and concentrated orange juice and crystallized sugar in the last one.

Comparing to December of 2009, the four categories of use recorded positive rates, specially capital goods (6.2%) and durable consumer goods (6.0%). In the first sector, the main positive impact was from capital goods for transportation, which advanced 16.7%, followed by capital goods for industrial purposes (11.0%) and for construction (17.9%), while the negative pressures came from capital goods for mixed use (-2.3%), agriculture (-16.2%) and electric energy (-6.4%). The production of durable consumer goods was mainly influenced by the rise in the manufacturing of automobiles (8.3%), followed by the positive contributions from motorcycles (40.1%), furniture articles (7.7%) and "white-line" appliances (2.1%). In that category of use, it is worth mentioning the negative influence coming from "brown line" house appliances (-12.5%), mainly pressured by the reduction in the production of televisions.

Intermediate goods, by rising 2.7%, repeated the result of December for the overall industry and kept the upward trend started in November of 2009. This month expansion was mainly due to the advances in products associated with mining and quarrying industry (10.4%), non-metallic minerals (6.9%), motor vehicles (7.9%), other chemical products (2.5%) and food (2.7%). It is worth highlighting that positive results continued for producer goods for civil construction (7.6%), the fourteenth consecutive positive rate, and packaging (2.0%), with fifteen consecutive months of growth. Conversely, the negative impacts came from primary metallurgy (-4.2%), textile industry (-4.8%), metal products (-5.6%) and petroleum refinement and alcohol production (-0.8%).

The production of semi- and non-durable consumer goods recorded a slight positive change of 0.4% against the same month a year ago. The highlights were fuels (4.1%), followed by food and beverages for domestic consumption (0.8%) and other non-durable goods (0.3%). In these sectors, the highlights were gasoline in the first group; beer, draft beer and soft drink in the second one; and medicines and books in the last one. Conversely, the drop of 4.9% in the semi-durable subsector, pressured by the contraction in the production of plastic and leather female footwear, dampened the growth of the sector.

The quarter indexes showed that the industrial sector, by growing 3.3% in the fourth quarter of 2010, kept the upward trend started in the last quarter of 2009 (5.9%), both comparisons against the same period a year ago. It is worth mentioning that the industrial production recorded decreasing positive rates in 2010 (18.2% in the first quarter, 14.3% in the second one and 8.0% in the third one), due to the rise in the basis of comparison, as production kept an upward trend all over 2009, and also due to less dynamism in industry in the last months of 2010. As for the categories of use, all registered reduction in the pace of growth all over 2010. The highlight was capital goods, which, despite recording the highest rate in the fourth quarter of the year (7.2%), displayed the highest reduction in the pace compared with the result of July-September (21.2%). It was followed by intermediate goods (from 8.7% to 3.8%), semi- and non-durable consumer goods (from 4.7% to 1.6%) and durable consumer goods (from 2.4% to 1.5%).

Accumulated index in 2010 is positive for 25 of the 27 industrial sectors

As 2010 closed, the industrial sector advanced 10.5% against the same period a year ago, the highest expansion since the 10.9% registered in 1986. The first semester of the year pointed to a growth (16.2%) higher than the one observed in the following semester (5.6%), both comparisons against the same period a year ago, attributable not only to the low basis of comparison, resulted from the international economic crisis in the end of 2008, but also to less dynamism in the industrial sector in the last quarter of 2010 (3.3%). In 2010, there was growth across all the categories of use, 66 of the 76 subsectors, 25 of the 27 sectors and 75% of the surveyed products, showing an expansion in production.

Among the activities, the most significant influences on the overall average were from motor vehicles (24.2%) and machines and equipment (24.3%), followed by primary metallurgy (17.4%), mining and quarrying industry (13.4%), other chemical products (10.2%), metal products (23.4%), food (4.4%), rubber and plastic (12.5%) and beverages (11.2%). In those sectors, the highlights were, respectively, the advances from automobiles, tractor trucks and trucks; wheel loaders and motor graders; special steel ingots, blocks and rods; iron ores; herbicides for agriculture use; capital goods parts and pieces; crystallized sugar; tires for trucks, buses and automobiles; and beer, draft beer and soft drink. Conversely, only tobacco (-8.0%) and other transportation equipment, with a slight negative change of 0.1%, recorded negative rates in the accumulated indicator of 2010.

As for the categories of use, the most significant expansion was concentrated in the capital goods sector (20.8%), influenced by the recovery of investment and trust from economy stakeholders. It was followed by intermediate goods (11.4%), explained by the highest demand for industrial producer goods for the production of final goods and to the partial recovery of the international demand for commodities. The production of durable consumer goods (10.3%) closed 2010 with a growth near the industry average (10.5%), propelled by the positive behavior of the internal market, mainly sustained by the maintenance of favorable credit conditions and by the labor market. The semi- and non-durable consumer goods sector, with a rise of 5.2%, recorded the most moderate growth in 2010, but it is worth highlighting that this was the sector to register the smallest drop in 2009 (-1.5%) among the categories of use.